If the front door belongs to an IFA, then no doubt the brochure sees the light of day for a matter of seconds before finding its proper place in the swing-bin in the kitchen, specially designed to con- tain bad smells. But behind many other front doors, as the scamsters who produce these brochures know, live potential victims. To them the attraction of the word “millionaire”, with all its associations of broadway musicals, Rolls-Royce cars and Chris Tarrant, is enough to make them forget any doubts. They contact the local-rate number – no scam there – and listen to a credible sounding message about buy to let. How you can borrow at low interest rates and cover your payments with rental income. How, by arranging discounts through a bulk-buying process, you can protect yourself against a property price correction and it may cost you a few thousand pounds to attend a seminar on buy to let and become a member, receiving details of the discounted property. But that will be more than made up for by the thousands you will make from property price inflation. Such, or very similar, were the marketing messages of five companies, including Sterling Mansion, Mansion Investments and CM2 Services. Many attended their seminars and many more were persuaded to pay the colossal fees. Mansion Investments charged a one-off fee of 27,000 to investors wanting to join its scheme. The bumf made it clear in the small print that Mansion did not claim you would have 1m of equity, just that your property, before you deduct the amount borrowed, could be worth more than 1m. But no one achieved a 1m portfolio. Many lost tens of thousands of pounds and most ended up paying the huge fees without getting any property. Now cliches are occasionally true, particularly the one that says a fool and his money are easily parted – and the other one that says if it looks too good to be true, it probably is. Scams such as this play on two things – the victims’ dreams of wealth and their ignorance of the way the financial world really works. Should we be protecting people from the pitfalls of their own dreams and ignorance or should it be caveat emptor? Before answering that, consider one more fact. This particular buy-to-let scam was exposed last week when the DTI closed down the firms. It was the DTI, not the FSA, that did it because, of course, buy-to-let mortgages are unregulated. Or rather, they are regulated but by the Consumer Credit Act and not the Financial Services and Mar-kets Act. The Consumer Credit Act allows the DTI to withdraw a license and close down firms that transgress but it is a blunt instrument. In the case of these scams, it was worth it. The men behind it – Kieran Connolly, Ian Jamieson and Barry Frost – were named by the DTI and their businesses were wound up. But the Financial Services and Markets Act is much stricter than the Consumer Credit Act. To sell products regulated under the former, you have to pass exams, be qualified and, most impor- tantly, watch what you say. No IFA would get away with a glossy brochure making it sound as if you could become, say, a “pension millionaire” without putting in much, or any, of your own money. But under the Consumer Credit Act, you can push your aggressive sales much har- der, saying much more about the merits of whatever you are selling without much come-back if you conveniently omit the risks. I think there are reasons to be very worried about that. The FSA will now regulate the advice given and the words used to market mortgages but only the normal mortgages representing the first charge on a residential property such as endowment mortgages. Quite apart from further true cliches involving stable doors and bolting horses, this is exactly the wrong way round. As the buy-to-let scam shows, it is precisely those products where there will be no regulation of advice given to customers that the risks are greatest that thousands will get mugged. It is crazy, for example, that the advice on second-charge mortgages used to consolidate debts is unregulated. The debt consolidation companies that secure these mortgages charge outrageous interest rates, impose hefty contingent charges for missed payments and need not even watch what they say when customers apply to them. These are the same group of customers as the buy-to-let victims – those who watch daytime TV, who dream of wealth (or at least, relief from debt) and who know little about finance. If regulation is nee- ded anywhere it is there, if only to remind potential scam victims of a few true cliches. The decision by the Government to regulate home- reversion plans among other mortgages has to be welcomed. The biggest players in the market right now, plus all those lenders who would like to join, had wanted regulation. Now it looks like being a credible marketplace, many elderly people who are house-rich but cash-poor will have a chance to join safe schemes. It will allow them to benefit from the equity in their property before they die rather than passing it on to their heirs who may well need cash less.